GOP TAX BILL FINALIZED

House Speaker Paul Ryan told Republican lawmakers on a phone call that the House will vote on the plan Tuesday, before the Senate, according to a person on the call. In a surprise decision, Sen. Bob Corker — who had opposed a previous draft over its $1.5 trillion cost — said he too would vote yes, which all but assures passage in the chamber.

A day after the bill’s prospects wavered somewhat, Republican leaders notched two victories on Friday, when Senator Marco Rubio of Florida said he would vote yes after gaining a more generous child tax credit in the final bill and Senator Bob Corker of Tennessee, who voted against the initial Senate bill over deficit concerns, said he would support the legislation. The bill also won praise from Senator Susan Collins of Maine, leaving it likely to pass with all 52 Senate Republicans in support.

As part of the package they will impose a 15.5 per cent one-off tax on offshore cash, coupled with an 8 per cent levy on less liquid assets, a Republican aide said. That is a stiffer “deemed repatriation” charge than earlier proposals from both chambers, underscoring the late scramble for revenue as lawmakers ensure their package does not bust deficit ceilings agreed to during the negotiations.

Republicans stood on the verge of delivering the most significant changes to the U.S. tax code in more than three decades, after a series of last-minute deals appeared to clear the last big obstacles to passage next week.

The House and Senate GOP hope to pass the sweeping measure by the middle of next week, hitting a year-end target. The House will vote on the plan on Tuesday, House Majority Leader Kevin McCarthy, R-Calif., said in a statement.

“The bill is an absolute dagger in the heart of the real-estate industry in New York,” said Ms. Olshan, a broker who issues a weekly report on high-end sales in the city.

Nearly one-third of New York City taxpayers and nearly half of all taxpayers in suburban Long Island and Westchester claim itemized deductions for state and local taxes, according to the Empire Center, a nonpartisan, nonprofit think tank based in Albany. Limiting those state and local tax deductions, home prices in Manhattan could fall as much as 9.5%, according to an analysis by Moody’s Corp.

A decades-old corporate tax break for performance-based pay of top executives faces elimination under the current tax bill, as Republican lawmakers say it has failed to rein in compensation or encourage responsible management.

Current law caps the amount companies can deduct from their taxes for executive compensation at $1 million. However, write-offs exceeding the $1 million limit are allowed for certain types of compensation, most notably performance-based pay, often cash or equity promised to executives if predetermined financial or stock-market targets are met.

Tens of millions of wage earners, retirees and young workers, especially in low- or no-tax states, will indeed find their taxes are much simpler. Millions of others—self-employed professionals such as doctors, lawyers, accountants and architects, business owners and even workers in the gig economy—could get more complicated taxes.

If she prevails, Collins will have been responsible for the passage of significant legislation that could help make insurance coverage more affordable for tens of thousands of Americans. And if not? “I’m counting on the administration to make sure that does not happen,” Collins said in an interview. “I would consider it a very serious breach of a promise to me.”

In a minor win for Democrats, the final GOP tax bill will not include a repeal of the Johnson Amendment, a change that would have allowed religious institutions and all nonprofit entities organized as 501(c)3s to endorse political candidates.

BITCOIN

Bitcoin blasted to another all-time high of almost $18,000 on the Bitstamp exchange on Friday, up 9 percent on the day, as warnings grew over the risks of investing in the highly volatile and speculative instrument.

Bitcoin is now sizing up to be what could be the biggest market bubble of all time. According to Birinyi Associates, bitcoin now looks to be bigger than any of the 10 other market bubbles it studied including the the tech bubble, beanie babies, the Dow in 1929 and the silver bubble of the late 1970s.

US futures exchanges date to the 19th century. After decades of experience and occasional scandal, the industry has developed time-worn rules to protect customers from violent price moves and broker defaults.

But in the view of some, bitcoin is uncharted territory. The manner in which the US regulator, the Commodity Futures Trading Commission, greenlighted the new contracts has led to concerns about potential perils ahead.

Among those worried is Thomas Peterffy, chairman of Interactive Brokers. “I started in the futures industry in 1968. I’ve seen many futures brokers go bankrupt and customers losing all their money. So I know how this works,” he says.

The trading of bitcoin futures, off to a slow but respectable start this week at the Cboe, is about to be given a boost by two additional players: TD Ameritrade and the CME.

The TD Ameritrade story is important because it operates the largest futures operation of any online brokerage firm. The firm just announced it will begin allowing trading of bitcoin futures on its futures platform on Monday. That means more retail participation and more liquidity.

Second, the entrance of the CME is significant because it operates a far larger futures business than Cboe. CME is preparing to launch its own bitcoin futures on Sunday. Expect higher volumes and a higher dollar value of trading.

NORTH KOREA, TRADE TENSIONS

Three days after offering to talk to North Korea “without precondition,” Secretary of State Rex W. Tillerson reversed course, insisting — as President Trump has all along — that the North must stop its nuclear threats and “earn its way” to negotiations.

“A sustained cessation of North Korea’s threatening behavior must occur before talks can begin,” Mr. Tillerson said at a United Nations Security Council meeting.

His remarks on Friday were a sharp contrast from his surprisingly conciliatory comments, made Tuesday, in which he said he was open to talking to the North about anything, including, as he put it, “the weather.” The White House swiftly distanced itself, saying that talks would be pointless so long as the North continued to threaten its neighbors and the United States.

Donald Trump will accuse China of engaging in “economic aggression” when he unveils his national security strategy on Monday, in a strong sign that he has become frustrated at his inability to use his bond with China’s President Xi Jinping to convince Beijing to address his trade concerns.

Several people familiar with the national security strategy — a formal document produced by every US president since Ronald Reagan — said Mr Trump would propose a much tougher stance on China than previous administrations.

With time running out and the United States continuing to take a tough stance, industry leaders and state officials have begun trying to convince the administration to avoid upsetting a trade pact they say has benefited many American companies and communities. In 2016, 33 American states counted Canada as their biggest export market, while six states ranked Mexico first.

Pushback from automakers and farmers, two groups that are likely to be harmed if the United States withdraws from Nafta, helped result in the series of meetings between the administration and Nafta’s supporters.

President Trump said he wouldn’t “yet” discuss whether he would pardon his former national security adviser and took another swing at federal investigators probing Russian interference in the 2016 election.

President Donald Trump’s private lawyers are slated to meet with special counsel Robert Mueller and members of his team as soon as next week for what the President’s team considers an opportunity to gain a clearer understanding of the next steps in Mueller’s probe, according to sources familiar with the matter.

Senior White House official Jared Kushner and his legal team are searching for a crisis public relations firm, according to four people familiar with the matter. Kushner’s lawyer, Abbe Lowell, has quietly called at least two firms, these people said. The inquiries have occurred in the past two weeks, and officials at the firms were asked not to discuss the conversations with others.

Asked Friday whether he believes the Russian government meddled with the 2016 presidential election, U.S. Secretary of Defense James Mattis reportedly replied: “Yes, I believe they did.” The comment comes in contradiction of President Trump, who has at times called the reports of Kremlin interference to be a “hoax,” a “made-up story,” or has said he believes Russian President Vladimir Putin when he denies his government did any such thing (despite all the evidence to the contrary).

RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS

For years, the historic run higher for U.S. stocks has been characterized as a “hated” rally, one that has consistently vexed investors with rising prices in the face of widespread skepticism.

If anything, repeated record highs in 2017 have only made money managers more dour. Big investors are heading into 2018 with the most bearish perspective on stocks since the great financial crisis, according to Boston Consulting Group’s annual investor survey. Fully 46% of investors were pessimistic about equity markets for the next year, up from 32% a year ago and 19% in 2015; more than one-third were bearish about stocks over three years, more than double last year.

Ten-year Treasury yields have traded this year in the narrowest range since 1965 — the year the group had its No. 1 hits such as “Yesterday” and “Help!” — as the reflation euphoria set off by Donald Trump’s election lost steam and the U.S. Federal Reserve achieved its interest-rate guidance.

U.S. rates volatility has been driven by low dispersion of economic activity and inflation, high predictability of the Fed’s policy given its forward guidance and short-volatility strategies driven by the global hunt for yield. Central bank policy remains the single most important factor driving volatility, through the impact it has on the psychology of risk-taking and supply of assets.

The cost of derivatives that allow global investors to access U.S. dollars has rocketed this week, with some reaching their steepest levels since the worst days of the eurozone sovereign-debt crisis.

A scarcity of dollars makes them more expensive to borrow, hurting non-U.S. banks and making a crucial form of credit harder to come by. Rules designed to make finance safer have already made dollars scarcer, and the Federal Reserve is currently sucking dollars out of the financial system as it rolls back its monetary stimulus. Changes in U.S. tax law may compound the shortage.

Foreign holdings of Chinese bonds have jumped 50 per cent in the past two years as overseas investors have seized on Beijing’s push to open up its estimated Rmb73tn ($11tn) fixed-income market. But, if some commentators are to be believed, we have not seen anything yet.

Despite the buying spree, foreigners still only held Rmb921bn of Chinese bonds in October, according to data from the Chinese Academy of Social Sciences and Citi, as the chart below shows. At just 1.86 per cent of the market, this is a smaller share (of an admittedly fast-growing market) than in early 2015.

MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS

Last-minute changes to the GOP’s big plan give a larger tax break to the wealthy and preserves certain tax savings for the middle class, including the student-loan interest deduction, the deduction for excessive medical expenses and the tax break for graduate students. A change made Friday morning to win over Rubio would expand the benefits of a child tax credit to give more money to working-class families.

The final plan lowers the top tax rate for top earners. Under current law, the highest rate is 39.6 percent for married couples earning over $470,700. The GOP bill would drop that to 37 percent and raise the threshold at which that top rate kicks in, to $500,000 for individuals and $600,000 for married couples. This amounts to a significant tax break for the very wealthy, a departure from repeated claims by Trump and his top officials that the bill would not cut taxes on the rich.

Starting on Jan. 1, 2018, big businesses’ tax rate would fall from 35 percent to just 21 percent, the largest one-time rate cut in U.S. history for the nation’s largest companies. The House and Senate bills originally had the big-business tax rate falling to 20 percent, but Republicans were not able to make the math work to keep the rate that low and start it right away in the new year, so they compromised by moving the rate to 21 percent. It still amounts to roughly a $1 trillion tax cut for businesses over the next decade.

One of the most controversial parts of the GOP tax plan is the push to greatly scale back how much state and local taxes Americans can deduct on their federal income taxes. Under current law, the state and local deduction (SALT) is unlimited. In the final GOP plan, people can deduct up to $10,000. The House initially restricted the $10,000 deduction to just property taxes, but the final bill allows any state and local taxes to be deducted, whether for property, income or sales taxes. The move is widely viewed as a hit to blue states such as New York, Connecticut and California, and there are concerns it could cause property values to fall in high-tax cities and leave less money for public schools and road repairs.

Beginning in 2019, Americans would no longer be required by law to buy health insurance (or pay a penalty if they don’t). The individual mandate is part of the Affordable Care Act, and removing it was a top priority for Trump and congressional Republicans. The final bill does not start the repeal until 2019, though. The Congressional Budget Office projects the change will increase insurance premiums and lead to 13 million fewer Americans with insurance in a decade, while also cutting government spending by more than $300 billion over that period.

In the end, the estate tax (often called the “death tax” by opponents) would remain part of the U.S. tax code, but far fewer families will pay it. Under current law, Americans can inherit up to $5.5 million tax-free (that threshold is $11 million for married couples). The House wanted to do away with the estate tax entirely, but some senators felt that was too much of a giveaway to the mega-rich. The final compromise was to double the threshold, so now the first $11 million that people inherit in property, stocks and other assets won’t be taxed (and yes, that means $22 million for married couples).

Most American businesses are organized as “pass through” companies in which the income from the business is “passed through” to the business owner’s individual tax return. S corporations, LLCs, partnerships and sole proprietorships are all examples of pass-through businesses. In the final GOP bill, the majority of these companies get to deduct 20 percent of their income tax-free, a large reduction that mirrors what was in the Senate bill. The changes, however, expire after 2025.

The final GOP bill gets rid of the corporate alternative minimum tax, a big relief to the business community. The Senate included the corporate AMT in its version of the bill, but the House did not.

CEOs aren’t waiting on a tax cut to “jump-start the economy” — a favorite phrase of politicians who have never run a company — or to hand out raises. It’s pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that.

Instead, Congress did what it always does: It put politics first. After spending the first nine months of the year trying to jam through a repeal of Obamacare without holding hearings, heeding independent analysis or seeking Democratic input, Republicans took the same approach to tax “reform” — and it shows.

The largest economic challenges we face include a skills crisis that our public schools are not addressing, crumbling infrastructure that imperils our global competitiveness, wage stagnation coupled with growing wealth inequality, and rising deficits that will worsen as more baby boomers retire.

The tax bill does nothing to address these challenges. In fact, it makes each of them worse.

A rising tide does lift all boats — but nowadays, in the U.S., not equally. Under both parties, recoveries have become increasingly lopsided. The current one has helped millions of people find work; it’s also benefited asset-owners far more than people who trade their labor for a paycheck. Income distribution, already the most unequal in the developed world, is getting worse. And that’s starting to influence everything from America’s spending habits to its elections.

“The story of our time is polarization — by party, by class and by income,” said Mark Spindel, founder and chief investment officer at Potomac River Capital in Washington, and co-author of a 2017 book about the Federal Reserve. “I don’t see anything in the tax bill to make that any better.’’

You think this is bad, think about what’s next. What’s next are cuts to Medicaid, Medicare, Social Security, and other domestic spending programs. Because this is the Republican formula:

Pass massive tax cuts for the top 1 percent. Run up the deficit. A year or two later go, “Oh my God, look at the deficit! This proves that spending is just out of control!” Start taking the axe to entitlement programs and the domestic discretionary budget.

President Trump’s recent denunciations of the Russia investigation recall the famous legal advice: “If the facts are against you, argue the law. If the law is against you, argue the facts. If the law and the facts are against you, pound the table and yell like hell.”

Trump shouted out his defense earlier this month: “What has been shown is no collusion, no collusion!” he told reporters over the whir of his helicopter on the White House lawn. Since then, Trump’s supporters have been waging a bitter counterattack against special counsel Robert S. Mueller III, alleging bias and demanding: “Investigate the investigators.”

But what do the facts show? There is a growing, mostly undisputed body of evidence describing contacts between Trump associates and Russia-linked operatives.

The nationalistic, race-baiting, fear-mongering form of politics enthusiastically practiced by Mr. Trump and Roy Moore in Alabama is central to a new strain of American evangelicalism. This emerging religious worldview — let’s call it “Fox evangelicalism” — is preached from the pulpits of conservative media outlets like Fox News. It imbues secular practices like shopping for gifts with religious significance and declares sacred something as worldly and profane as gun culture.

Journalists and scholars have spent decades examining the influence of conservative religion on American politics, but we largely missed the impact conservative politics was having on religion itself. As a progressive evangelical and journalist covering religion, I’m as guilty as any of not noticing what was happening. We kept asking how white conservative evangelicals could support Mr. Trump, who luxuriates in divisive rhetoric and manages only the barest veneer of religiosity. But that was never the issue. Fox evangelicals don’t back Mr. Trump despite their beliefs, but because of them.

These days, even though Mr. O’Reilly declared “victory” last year in the War on Christmas, Fox News still gives the supposed controversy wall-to-wall coverage and has folded it into the network’s us-versus-them, nationalist programming. The regular Fox News viewer, whether or not he is a churchgoer, takes in a steady stream of messages that conflate being white and conservative and evangelical with being American.

The power of that message may explain the astonishing findings of a survey released this month by LifeWay Research, a Christian organization based in Nashville. LifeWay’s researchers developed questions meant to get at both the way Americans self-identify religiously and their theological beliefs. What they discovered was that while one-quarter of Americans consider themselves to be “evangelical,” less than half of that group actually holds traditional evangelical beliefs. For others, “evangelical” effectively functions as a cultural label, unmoored from theological meaning.

Consumers will probably not encounter immediate changes to their internet service. The biggest broadband companies, like Comcast and AT&T, have promised that consumers will not see a change in how they experience the web. And with such a big spotlight on them, the companies will probably be careful about changing service plans, partly to avoid angering customers and attracting lawmakers’ attention.

Broadband companies are “likely to proceed cautiously pending final resolution of these legal challenges,” said John Beahn, a regulatory lawyer at Skadden, Arps, who does not have clients with interests in net neutrality. “They recognize the ultimate fate of the regulations is still far from certain at this point.”

But significant changes could come over time. For instance, AT&T could decide to charge a company like Etsy or Netflix more to deliver traffic from the website’s servers around the internet. Internet service providers, many of which are also media companies, could create faster lanes of delivery for their own sites, which would make it harder for the content of their rivals to show up in front of consumers. In the past, some providers have even blocked sites, as when AT&T prevented Apple’s FaceTime service from working for some customers of its wireless networks in 2012.

For the Chinese Communist Party, social credit is an attempt at a softer, more invisible authoritarianism. The goal is to nudge people toward behaviors ranging from energy conservation to obedience to the Party. Samantha Hoffman, a consultant with the International Institute for Strategic Studies in London who is researching social credit, says that the government wants to preempt instability that might threaten the Party. “That’s why social credit ideally requires both coercive aspects and nicer aspects, like providing social services and solving real problems. It’s all under the same Orwellian umbrella.”

The State Council has signaled that under the national social credit system people will be penalized for the crime of spreading online rumors, among other offenses, and that those deemed “seriously untrustworthy” can expect to receive substandard services. Ant Financial appears to be aiming for a society divided along moral lines as well. As Lucy Peng, the company’s chief executive, was quoted as saying in Ant Financial, Zhima Credit “will ensure that the bad people in society don’t have a place to go, while good people can move freely and without obstruction.”

She has been undermined by her own cabinet ministers, derided as pitiful in Brussels and mocked in the news media as a “dead woman walking.” Though the only other woman to hold the post of prime minister, Margaret Thatcher, was able to transcend her gender, Mrs. May has been hemmed in on all sides by stereotypes — first criticized as a humorless headmistress, not human enough to be likable, and then as too human, and therefore weak.

“When she decides to do something, she really is capable of putting herself through a lot,” said Alasdair Palmer, who worked as a speechwriter for Mrs. May for a year when she was home secretary, the cabinet official responsible for policing and security.

“Most people would have thought, ‘This isn’t worth it, it’s so horrible,’” he said. “She has decided she has to do it, that it’s in the best interests of the country. I think she has put her interests to one side. I don’t think she is particularly interested in power for its own sake.”

Thetford is a microcosm of the divisions that led to the Brexit vote, and a harbinger of how leaving the EU could hit communities across the country. Like many towns in the area, it has undergone a rapid demographic transformation over the past decade as migrants from the European Union flocked to the region to work on farms and meat factories. Many of the east Europeans in Thetford work nearby at Traditional Norfolk Poultry, one of the companies Bloomberg is tracking through the Brexit process.

Now many of those migrants are starting to pack their bags for home or the continent, fed up with the weak pound that dilutes the earnings they send home and with the overall anti-foreigner atmosphere post-Brexit. That’s unlikely to change even after U.K. Prime Minister Theresa May last week finally clinched a preliminary Brexit divorce deal that protects the roughly 3.5 million EU citizens in the U.K.

If east Europeans decide to leave the U.K. in large numbers, local businesses will suffer badly, said Victor Lukaniuk, a county councillor from the neighboring region who heads a Polish community association. The unemployment rate in the Breckland district, 3.4 percent, is lower than the national average. That doesn’t give businesses in the area much scope to find workers.

“Cheap Polish labor has maintained this country for years,” he said, leaning on a desk in the classroom of the Polish language school. “The foreigners have taken up the slack. If you get rid of them, who will pull up all your vegetables? Brexit is the biggest mistake this country has ever made.”

From trade talks to WTO curveballs — the Brexit negotiations are about to get really tricky. Despite all the hubbub about the deal reached Friday between European Commission President Jean-Claude Juncker and U.K. Prime Minister Theresa May, the official declaration of “sufficient progress” and the authorization to proceed to Phase 2 of the negotiations can only be made by the EU27 leaders.

The United Nations monitor on poverty and human rights has issued a devastating report on the condition of America, accusing Donald Trump and the Republican leadership in Congress of attempting to turn the country into the “world champion of extreme inequality”.

Philip Alston, the UN special rapporteur on extreme poverty and human rights, has completed a two-week official tour of the US by releasing an excoriating attack on the direction of the nation. Not only does he warn that the tax bill currently being rushed through Congress will hugely increase already large disparities between rich and poor, he accuses Trump and his party of consciously distorting the shape of American society in a “bid to become the most unequal society in the world”.

At the core of Mr Murdoch’s appetite for risk has been an ambition to build an empire that he could eventually hand over to one of his children to run. Yet that dynastic dream has ended, according to Andrew Neil, a former editor of the News Corp-owned Sunday Times. “Rupert has spent the past 40 years building a dynasty,” he told the BBC. The agreement to sell marked “the end of a lifetime’s ambition”.

Mr Murdoch sounded a more defiant note, saying the sale did not mean he was in retreat. “Absolutely not,” he told Fox investors on a call. “We are pivoting at a pivotal moment.”

Speaking to the FT, Mr Murdoch said the decision to sell was quite a simple one: he realised that the game had changed. “I can see a big picture,” he said, pointing to the new generation of strait-laced and deep-pocketed challengers from Silicon Valley — Amazon, Netflix, Apple and Facebook — that are threatening established media players.

The streaming wars are about to get a lot more interesting. It has been roughly five years since services like Netflix and Hulu started making original programming. So far, Netflix has been the clear winner. It spends billions of dollars a year and has seen subscriptions soar, especially internationally, with the critical and popular success of shows like “Stranger Things” and “The Crown.”

But Disney’s deal to buy most of 21st Century Fox changes things. Even before the deal was announced on Thursday, Disney had already announced plans to unveil two streaming services: one focused on sports that will begin next year and one focused on entertainment that will become available in 2019. The second service, fueled by Disney’s existing content and now 21st Century Fox’s TV shows and movies, promises to be a formidable entrant into the streaming world.

What I found on these sites was more pitiful than fear-inspiring. Sure, some alt-tech platforms were filled with upsetting examples of Nazi imagery and bigoted garbage. But most were ghost towns, with few active users and no obvious supervision. As technology products, many are second- or third-rate, with long load times, broken links and frequent error messages. A few had been taken offline altogether.

If the alt-right’s ideology harks back to 1940s Germany, its web design might transport you to 1990s GeoCities. Even the movement’s own adherents have grown frustrated. One Gab user, who claimed to be using the site while temporarily suspended from Twitter, complained in a public post about the site’s technical inferiority.

In 2017, US Special Operations forces, including Navy SEALs and Army Green Berets, deployed to 149 countries around the world, according to figures provided to TomDispatch by US Special Operations Command. That’s about 75 percent of the nations on the planet and represents a jump from the 138 countries that saw such deployments in 2016 under the Obama administration. It’s also a jump of nearly 150 percent from the last days of George W. Bush’s White House. This record-setting number of deployments comes as American commandos are battling a plethora of terror groups in quasi-wars that stretch from Africa and the Middle East to Asia.

“Most Americans would be amazed to learn that US Special Operations Forces have been deployed to three quarters of the nations on the planet,” observes William Hartung, the director of the Arms and Security Project at the Center for International Policy. “There is little or no transparency as to what they are doing in these countries and whether their efforts are promoting security or provoking further tension and conflict.”

USA ECONOMY DATA, CITIES AND STATES

As expected, the Federal Reserve on Wednesday raised its benchmark interest rate to a range between 1.25 percent and 1.5 percent. It is the fifth rate increase as the Fed continues to retreat from its economic stimulus campaign. It is almost certainly the last change in monetary policy on Janet Yellen’s watch as chair.

The economy has expanded at a fairly steady pace since the financial crisis ended, and the Fed expects that growth to continue. But this is the sixth straight year that inflation has remained below the 2 percent annual pace the Fed regards as healthy. Policymakers have continued to raise rates because most Fed officials are confident that inflation will strengthen as the economy continues to grow.

U.S. industrial production rose slowly in November, with the increase entirely due to a post-hurricane recovery in oil and gas extraction. Industrial production—a measure of output at factories, mines and utilities—rose a seasonally adjusted 0.2% in November from the prior month, the Federal Reserve said Friday. This was slightly below the 0.3% rise forecast by economists.

POSITIONING, INFLECTION, MARKET CALLS

Hedge funds are pulling out of gold bets as more exciting moves in equities and cryptocurrencies make safe-haven investments look boring. Money managers cut their bets on a bullion rally at the fastest pace in five months as prices head for their worst quarterly loss in a year. Speculators are throwing in the towel as the metal failed to sustain the gains that took futures to a one-year high in September.

While the metal posted some modest gains recently, its performance still pales in comparison to the record-breaking rally of U.S. equity indexes and the dizzying surge in bitcoin. Synchronized global growth and prospects for higher U.S. interest rates hurt the appeal of non-interest bearing gold, while geopolitical tensions failed to spur enough haven demand.

A rally across Southeast Asia has pushed the MSCI Asean Index up 24 percent to its highest level in more than two years, beating benchmark indexes in Europe and the U.S. Economies are expanding, governments are spending more and central banks have held benchmark interest rates steady.

Indonesian and Philippine stock markets have hit multiple records in 2017. Vietnam’s VN Index is poised to close with its biggest gain in eight years fueled by state-owned company sales and listings. Thailand has made a comeback in the second half of the year with double digit gains and even Malaysia — Asia’s second worst performing stock market — is getting a slight boost as foreigners resume stock purchases.

For now, U.S. shares are setting records for tranquility. The S&P 500 has gone 68 sessions without rising or falling 1 percent, the longest stretch since 1995. At one point it went 51 days without a 0.5 percent fall, the longest since 1965. Using a risk-adjusted measure called the Sharpe ratio, returns relative to volatility in 2017 are the third-best in half a century.

To Wilson, next year’s macro environment is certain to be less benign, as central banks move toward less market-friendly policies. The U.S. tax overhaul will probably make it harder for U.S. firms to issue reliable earnings guidance, feeding equity turbulence.

Wilson’s warnings may be of interest to traders who are betting on a lasting peace, including owners of exchange-traded funds and notes that go up when the VIX goes down. With $2.4 billion in assets, short volatility securities have amassed the most cash on record, according to data compiled by Bloomberg last month.

COLOR, EARNINGS, SENTIMENT, VALUATIONS

Elliott Management, the activist fund, has called for an urgent shake-up at Hess, the US oil exploration and production company, arguing for changes that could include replacing the chief executive, share buybacks or a takeover by another group. The fund’s loss of patience with Hess, one of the leading oil producers in the Bakken formation of North Dakota, is the latest sign of investors’ growing concerns about poor returns on investment in the US exploration and production industry.

CSX lost about $4 billion in market value after Chief Executive Hunter Harrison was placed on medical leave, a stark reversal for investors who had shrugged off concerns earlier this year about the health of the renowned railroad turnaround artist.

DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS

U.S. private equity giant KKR & Co. agreed Friday to acquire Unilever PLC’s margarine and spreads business in a deal that values the unit at €6.83 billion ($8.03 billion), making it one of the largest European acquisitions by a buyout firm this year.

Twitter Inc.’s shares soared on Thursday, the day after the Goldman Sachs Group Inc. chief executive officer tweeted a photo of himself with Jack Dorsey at the technology company’s offices in San Francisco. The presence of Lloyd Blankfein was cited by several traders as a factor in the stock’s rally amid rekindled merger speculation on the day Walt Disney Co. announced a $52.4 billion deal for 21st Century Fox Inc. assets. Twitter shares rose as much as 7.3 percent, reaching the highest in more than a year.

A relentless bull-run in U.S. stock indexes this year has set the stage for a strong IPO market in 2018, with several multi-billion dollar firms including Airbnb and Spotify widely expected to grab headlines with their offerings.

HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT

Billionaire Alan Howard may be having the worst year of his career as a hedge-fund manager, but the 54-year-old isn’t ready to throw in the towel.

Brevan Howard, once one of the world’s largest hedge funds, has seen its assets plunge by three quarters from its $40 billion peak as investors deserted Howard as he struggled to navigate markets. In a bid to turn things around, the no-nonsense, fast-talking trader has started his own fund to make riskier bets and allowed his top managers to run their own pools again in a strategy u-turn. Howard is also experimenting with artificial intelligence and is planning a fund-services business.

One of the last remaining commodities hedge funds, Madava Asset Management, is shutting down after a major investor requested to pull funds, according to people familiar with the matter. Blackstone Group, which had backed Madava since its founding earlier this year, was the investor asking to withdraw money, the people said.

An investor who has seen the financials said the fund’s overall performance for this year through November was down 15% after fees. A person familiar with the matter said that figure didn’t accurately represent the fund’s performance since it was reorganized in March.

The hedge fund industry may be getting one step closer to its robot-guided future. Seventy percent of new hedge funds that will start next year will include investment processes that use computer models, including artificial intelligence and machine-learning technologies, according to a prediction in a Deloitte report released Thursday. That’s a jump from 47 percent in 2015.

ENERGY RENEWABLES, NUCLEAR

After years of double-digit growth, home solar installations in the United States are poised to fall for the first time this year, according to a report released on Thursday by GTM Research.

The reason? An analysis of installation data suggests that most of the slowdown is traceable to a single company: Tesla Inc, which acquired sister company SolarCity about a year ago.

For years, SolarCity, with early backing from Tesla CEO Elon Musk, was the biggest player in residential solar and the driving force behind that market’s supercharged growth. When Tesla bought SolarCity last year, Musk called the acquisition a “no-brainer,” saying the two companies shared “the same overarching goal of sustainable energy.” But under Tesla’s ownership, the company has largely stopped its aggressive marketing campaigns and ambitious expansion.

As a result, Tesla’s rooftop solar installations have fallen sharply each quarter this year compared to last. In the third quarter, installations were off by 42 percent over the previous year.

POLLUTION, CLIMATE & ENVIRONMENT

With fire crews continuing their battle against the fourth-largest wildfire in modern California history, smoke inhalation has become a major concern for residents in Santa Barbara and Ventura counties. Though the skies cleared a bit on Friday, officials warn that erratic Santa Ana winds could make conditions difficult to forecast. It could mean more smoke and the potential for fire in residential areas.

Dry, gusting winds are aggravating fire worries across much of central and western California, including those areas where infernos are still raging and places that were scorched in October, the U.S. Storm Prediction Center said.

Satellite images of the Arctic National Wildlife Refuge show the effects of an oil well that operated there in the mid-1980s. “It’s easy to do something on the tundra but it’s very difficult to restore,” said Francis Mauer, a retired biologist for the United States Fish and Wildlife Service who worked in the refuge for decades, including the years when the well was in place.

Lifting the gloom after months of stalemate over Britain’s exit from the European Union, the bloc’s leaders on Friday agreed to a new round of talks, applauding the efforts of Prime Minister Theresa May while putting the onus on her to specify the type of future relationship Britain wants with them.

European leaders agreed to advance Brexit negotiations but called on U.K. Prime Minister Theresa May to tell them quickly what her government wants from a future trade agreement for serious talks to start in March.

EUROPE

Berlin’s new international airport will open in October 2020, almost a decade later than originally planned, a development that marks the latest twist in a tale of engineering chaos that has captivated and embarrassed Germany in equal measure.

Europe’s second-highest court has rejected a request from the U.S. government to intervene in Apple’s challenge against an EU order to pay back taxes of up to 13 billion euros ($15.3 billion) because it failed to prove a direct interest in the outcome of the case.

Lengthy leaders’ talks over dinner at a summit in Brussels failed to yield a consensus as countries including Germany resisted proposals to phase out refugee quotas. Diplomats said the atmosphere was better than at a heated pre-summit meeting on migration earlier this week, even if there was little sense of positions shifting.

GEOPOLITICS, CRIME, TERRORISM

The Trump administration is advancing a strategy that could derail efforts by Boeing Co. and Airbus SE to sell hundreds of jetliners to Iranian airlines, U.S. officials said.

The two aerospace giants have lined up deals over the past 15 months that have been left in limbo as the White House reassessed its Iran policy and has threatened to walk away from an international nuclear deal if Congress and European partners don’t address concerns, with only a handful of Airbus planes so far delivered.

The killings of two members of South Africa’s ruling African National Congress, both set to cast crucial ballots at the party’s leadership conference this weekend, mark the latest in a violent spree that has left at least 40 local politicians dead since the start of last year.

A former chief of Interpol says that Argentina bungled the investigation into a 1994 terrorist attack at a Jewish community center, a crime that has newly roiled the country’s political establishment.

The crime has never been formally solved. In 2015, a special prosecutor concluded that it was likely that Argentine officials had colluded with Iran to cover up that country’s role in the attack, which killed 85 people. But the prosecutor was killed in mysterious circumstances, and last week, a federal judge requested that a former president, Cristina Fernández de Kirchner, be arrested and charged with treason, saying she had taken part in the cover-up.

The judge made another startling claim: He asserted that Ronald K. Noble, an American and a former New York University law professor who led the International Criminal Police Organization, known as Interpol, from 2000 to 2014, was in on the cover-up.

Mexico’s Congress on Friday passed a law that strengthens the military’s role in fighting organized crime, defying an outcry from human rights groups, police experts and even United Nations officials who warned that the measure will lead to abuses.

The law, which President Enrique Peña Nieto is expected to sign, sets up a legal framework to deploy soldiers in regions controlled by drug gangs.

The law’s supporters argue that it ends a dozen years of improvised orders that place soldiers on the streets with no clear mission and no deadline. But critics say the new rules will vastly expand military authority without checks and balances and offers no exit strategy to cede eventual leadership of the campaign to combat drugs to an effective police force.

Four Palestinians were killed – including one who stabbed an Israeli police officer — and about 250 others were wounded in clashes with security forces as the fallout continued Friday over President Trump’s recognition of Jerusalem as the Jewish state’s capital.

American military units that participated in the decisive battle for Mosul against the Islamic State were hampered by difficulties in sharing battlefield imagery and often had different understandings of what was happening on the battlefield, according to a new study.

The presence of the army, which has been used in the past to tilt elections in the governing party’s favor, is still felt across the country. Soldiers remain deployed at checkpoints on roads and in towns and the countryside — often performing duties that they are not legally allowed to assume in peace time, critics say.

“This is a military government,” said Elias Mudzuri, a vice president of the Movement for Democratic Change, the main opposition party. “And when you have a military government and it wants to stay in power, it could do anything.”

PROPAGANDA, CORRUPTION, AUTHORITARIANISM

The Trump administration is prohibiting officials at the nation’s top public health agency from using a list of seven words or phrases — including “fetus” and “transgender” — in any official documents being prepared for next year’s budget.

Policy analysts at the Centers for Disease Control and Prevention in Atlanta were told of the list of forbidden words at a meeting Thursday with senior CDC officials who oversee the budget, according to an analyst who took part in the 90-minute briefing. The forbidden words are “vulnerable,” “entitlement,” “diversity,” “transgender,” “fetus,” “evidence-based” and “science-based.”

In some instances, the analysts were given alternative phrases. Instead of “science-based” or ­“evidence-based,” the suggested phrase is “CDC bases its recommendations on science in consideration with community standards and wishes,” the person said. In other cases, no replacement words were immediately offered.

Google moved to strip from its news search results publications that mask their country of origin or intentionally mislead readers, a further step to curb the spread of fake news that has plagued internet companies this year.

To appear in Google News results, websites must meet broad criteria set out by the company, including accurately representing their owners or primary purposes. In an update to its guidelines released Friday, the search giant added language stipulating that publications not “engage in coordinated activity to mislead users.” Additionally the new rules read: “This includes, but isn’t limited to, sites that misrepresent or conceal their country of origin or are directed at users in another country under false premises.”

A popular tactic for misinformation campaigns is to pose as a credible U.S. news outlet. Russian Internet Research Agency, a Kremlin-backed organization, used that technique to reach an audience of nearly 500,000 people, spread primarily through Twitter accounts, Bloomberg reported earlier.

Even before the latest demonstrations, many of Germany’s 100,000 Jews were feeling uncomfortable. There were 470 anti-Semitic incidents in Berlin alone last year, a 16 per cent increase on 2015. The seriousness of the problem was exemplified by the story of a Jewish teenager, the grandson of Holocaust survivors, who was forced to quit his Berlin school earlier this year after being repeatedly beaten and abused by Arab and Turkish classmates.

But it is not just Arab immigrants who are fuelling fears about anti-Semitism. Another significant factor is the growing strength of the AfD, whose rhetoric has grown increasingly nationalistic in recent months.

ELECTORAL POLITICS

After years of plummeting enrollment and hand-wringing over the value of a law degree, interest in law school is starting to rebound. Students and prelaw advisers attribute at least part of the rise to the legal tumult of 2017.

Mr. Moore’s loss — which will send the first Democrat from Alabama to the Senate in 25 years and cut the Republicans’ already thin majority to a single seat — has only stoked Mr. Bannon’s discontent and stirred up fresh worry that the party is again descending into Tea Party-type spasms of self-defeating rage.

To avoid that, many Washington Republicans have no intention of patting Mr. Bannon on the head. They intend to kneecap him before he has the chance to recover.

“First is to dry up his money,” said Scott W. Reed, the chief political strategist for the U.S. Chamber of Commerce, a pillar of the Republican establishment, explaining how top Republicans in Washington were making a new round of calls to donors across the country to press them not to donate to Mr. Bannon or the candidates he supports.

“Two is to try and drive a wedge between him and Trump to the point where Trump is questioning him and his judgment,” Mr. Reed added. “You win, you win. You lose, you’re a loser. And that’s what Bannon has to wear around his neck now. A big L.”

SCANDALS, LAWSUITS, FINES, REGULATORY

A salacious letter alleging questionable and deceptive business practices by Uber Technologies Inc. was released to the public Friday as part of Alphabet Inc.’s lawsuit over trade-secret theft. The letter, written by an attorney representing former Uber security employee Richard Jacobs, said the ride-hailing company spied on rivals, bribed officials and used encrypted messaging software to hide its tracks.

Jacobs has since retreated on some claims in the letter. He said in court last month that his lawyer drafted the document and that he couldn’t stand by certain allegations, including ones pertaining to the theft of Alphabet’s self-driving car information at Waymo, which are at the center of the case. Uber paid Jacobs $4.5 million to work as a consultant following the company’s receipt of the letter and gave his lawyer $3 million. The company later derided Jacobs as an “extortionist” who made “fantastical” claims for money.

CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE

Facebook Inc. acknowledged research showing that some social-media use can be harmful to mental health, a rare admission that comes after many former executives raised questions about the platform’s imprint on the world.

A Friday blog post by Facebook’s top researcher pointed to external studies showing the negative effects of “passive” use of social-media sites to read news but not interact with anyone.

Facebook said the solution to the mental malaise was more Facebook. The blog post pointed to Facebook’s internal research indicating “active” use of Facebook could improve a person’s mood and well-being. The company defined active use as “sharing messages, posts and comments with close friends and reminiscing about past interactions,” citing two Facebook papers published in 2011 and 2016.

Influencers, the social-media stars courted by fashion, beauty and luxury brands for their legions of internet followers, are attracting a new crowd—regulators.

These stars offer their fans on Instagram, Facebook and other platforms what might seem like unscripted glimpses into their daily lives, complete with products and brand mentions—but sometimes without disclosing that companies have paid them in cash, goods or services.

Regulators say such financial rewards—even those given to influencers without explicit demands in return—can run afoul of longstanding rules against deceptive marketing if they aren’t disclosed. Authorities in the U.S., the U.K., France and elsewhere are policing social media to ferret out potential offenders.

MEDIA, CABLE, SPORTS, ENTERTAINMENT

Disney’s deal to purchase a large portion of 21st Century Fox Inc.’s assets, announced Thursday, would double its 30% stake in Hulu. For the first time, a single company would control the streaming service’s direction. Comcast Corp.’s NBCUniversal and Time Warner Inc. are the other joint owners, with 30% and 10% of Hulu, respectively.

With one majority owner, Disney Chief Executive Robert Iger said Thursday, managing Hulu will be “a little more clear, efficient and effective” than with equal partners. The acquisition, he added, “will enable us to greatly accelerate Hulu…and become a more viable competitor to those already out there.”

AIRLINES, SHIPPERS, RAIL, TRANSPORTS

Ryanair, Europe’s biggest budget airline, built itself into a juggernaut by aggressively cutting costs at every opportunity. Fuel consumption was tightly controlled. Turnaround times were slashed. And, crucially, unions were banned.

Now Ryanair has been forced to change its stance on labor, as it faces a growing backlash among its ranks. The carrier on Friday officially recognized pilot unions, a move that could cut into the company’s profit and prompt a broader industry shakeout. It is a sign that Ryanair will increasingly have to behave like its competitors, grappling with the labor costs that usually face a legacy carrier. Investors recognized the threat, with shares of the carrier falling more than 8 percent on Friday.

“It’s an acknowledgment that the fundamental core of the business model has to change and they’re going to have to start operating like a normal airline,” said Andrew Charlton, managing director of Aviation Advocacy, a consultancy.

AEROSPACE, MILITARY & DEFENSE

“We see civil supersonic aviation as an emerging and potentially substantial opportunity,” said Orlando Carvalho, executive vice president of Lockheed’s aeronautics unit. Mr. Carvalho said Lockheed will spend a year considering whether to help build the 12-passenger AS2 jet.

Space Exploration Technologies successfully launched a refurbished cargo capsule atop a previously used rocket toward the international space station, a milestone following its launch of the first private spacecraft to Earth orbit and back seven years ago.

With Friday morning’s smooth countdown and liftoff highlighting the company’s progress since its historic December 2010 feat, the company’s founder, chairman and chief designer, Elon Musk, notched another milestone by reusing a Falcon 9 booster rocket on a U.S. government flight.

ARTIFICIAL INTELLIGENCE, DRONES, FUTURE TECH

Last month, the San Francisco Society for the Prevention of Cruelty to Animals deployed a 400-pound robot to help combat a sharp rise in car break-ins and other crime at one of its animal shelter facilities here.

On Thursday, the Knightscope K5 was benched amid complaints that it was being used to harass the neighborhood’s sizable homeless population.

The shelter’s officials said in local news reports that break-ins and discarded drug needles had decreased at the Mission District campus after the robot was deployed. The white, Weeble-shaped robot rolled along snapping photos that it relayed to human guards.

“It’s scaring a lot of homeless, because they think it’s taking pictures of them,” said Moon Tomahawk, an unemployed 38-year-old man who frequents the homeless encampments nearby.

SCIENCE, NATURE, PSYCHOLOGY

It weighs as much as 780 million suns and helped to cast off the cosmic Dark Ages. But now that astronomers have found the earliest known black hole, they wonder: How could this giant have grown so big, so fast?

While sexual interactions between closely related species have been seen for all manner of animals, from various species of fish to species of baboon, such liaisons are rare, with the sexual assault of king penguins by Antarctic fur seals the only other known example between distant species.

But earlier this year, a study revealed a male Japanese macaque had been filmed mounting a female Sika deer at Yakushima island in southern Japan. Gunst-Leca said it wasn’t clear quite what was going on.

MISCELLANEOUS

These men – known by nicknames such as the “nuclear duo” and the “missile quartet” – have built an intercontinental ballistic missile that appears capable of hitting any city in the United States, an extraordinary scientific achievement for the world’s most isolated country.

At only 33, Mr. Kim has been ruthless about consolidating power, executing scores of senior officials, including his own uncle. But he has showered his regime’s scientists with incentives and adulation, turning them into public heroes and symbols of national progress.

“We have never heard of him killing scientists,” said Choi Hyun-kyoo, a senior researcher in South Korea who runs NK Tech, a database of North Korean scientific publications. “He is someone who understands that trial and error are part of doing science.”

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